Underwhelming sales figures and consistently high churn rates are pervasive problems for organizations large and small. Effectively communicating the value of your product or service to each customer can seem impossible.
What’s more, measuring customer success has always felt somewhat intangible, as has linking customer experience with financial value. That is, until you have a grasp of CX value realization.
Customer onboarding, retention and lifetime loyalty rest on one key factor: customer value realization. No matter how clearly you’ve defined the value of your product or service, it doesn’t instantly translate to consumers.
Only through measuring the value realized and defining a value realization strategy can business leaders truly communicate value to the people who matter most. Get this right, and you’re well on your way to inspiring a long list of loyal customers.
What Is Value Realization?
When a customer begins the hunt for a product or service, they’re looking to solve a problem. That’s business 101. This value expectation drives them to research and try different options until they find one that has a positive impact.
However, the decision is often shallow without a clearly defined CX value realization strategy. When customers have a superficial understanding of the worth a solution brings, they’re more likely to be fickle and less inclined to be loyal.
For generations, companies have made price and value synonymous, but this is highly reductive. Consumers care about a lot more than how much something costs — especially in today’s culture.
Value realization from a customer experience standpoint is about ensuring customers have a deep understanding of the value of your offering. To achieve that, you need to align your output with the customer’s unique strategic or personal goals.
The consumer feels validated and affirmed in their purchase decision based on a clear understanding of the impact delivered by using your solution. When you adopt this mindset, you’re more likely to inspire people to become lifelong advocates of your company.
The Power of Post-Purchase Moments
For most businesses, measuring customer success involves transactional metrics. Whichever industry you operate within, there’s a solid chance most of your key performance indicators (KPIs) center on landing a sale.
Repeat business and renewals are great examples of such metrics. However, as useful as these metrics are for measuring baseline loyalty, they don’t tell you anything about customer experience. And with consumer expectations shifting faster than ever, relying on these transactional KPIs doesn’t give you much to work with.
The real currency of customer satisfaction is CX. To truly tailor your offering to customer expectations, the output must align with your target audience’s desired outcomes. This involves more complex calculations based on the total sum and nature of engagements with your brand across the end-to-end customer journey.
If you can gather information about the why and how using surveys and other tools, you’re winning. Understanding the post-purchase value of your offering is an often underutilized — and highly useful — tool.
For customers, the point of purchase is poised at the beginning of the customer journey. However, many operators treat acquisition, a sale and a follow-up email as the be-all-end-all.
Of course, that doesn’t consider how your organization meets your customers’ needs. And without measuring how you’re actually impacting them, you can’t manage the end-to-end customer experience.
Realizing Value From a Customer Perspective
Many business leaders still think of customer experience as focused solely on the purchasing experience. As such, it stands to reason that churn rates and attrition metrics are higher than most operators would like.
To inspire lifelong loyalty in a highly competitive marketplace, it’s time to shift into an outcome-driven way of thinking. Once the purchase is made, how do you continue to deliver an exceptional experience and delight customers?
CX value realization is about measuring and reiterating the ongoing value your product or service delivers. According to a Deloitte study, Customer Outcomes: The Cornerstone of Exponential Growth, continually engaging consumers relies on the following four emotional hooks:
- Understand: Demonstrate an understanding of the individual customers’ use cases and expectations regarding engagement and interactions.
- Enable: Enable the customer to quickly and easily find solutions for themselves or access customer support agents who can intuitively meet their needs.
- Empower: Use data, insights and feedback tools to make the customer feel prioritized and empowered at every brand interaction.
- Work: Deliver personalized, proactive and regularly updated solutions to ensure your product or service keeps working for your customers.
The Benefits of Realizing Value
To break it down, realizing value can have four major advantages for any business:
- Reduce the cost of customer acquisition and boost profit by retaining more loyal advocates.
- Proactively reduce churn by improving customer satisfaction, addressing pain points and unearthing gaps in value promised vs. value realized.
- Gain deeper insights into customer needs by following their engagement and experience across the customer lifecycle.
- Demonstrate in-depth, quantifiable economic value provided to customers that they wouldn’t see if you didn’t implement a CX value realization strategy.
The Ongoing CX Value Realization Cycle
Customers realize value when they recognize the advantages your company brings them. The clearer their understanding of the value delivered, the more likely they are to be loyal.
Before attempting to build a framework and define a strategy, CX leaders should know the stages of value realization.
Before attempting to teach customers to realize value, every stakeholder must be unified on the definition of that value.
Sales and marketing departments must have a clear picture so that they can communicate it at the point of advertising and sale. Without this key step, you risk customers defining the value for themselves. If this happens, it’s impossible for the business to align outcomes with expectations.
The value definition helps customers see how a purchase meaningfully adds value. For optimal results, salespeople should customize this definition based on the specific customer and their unique needs.
At this point, you should outline the metrics you’ll use to measure the actual value delivered. These KPIs should be customized based on the reason the customer has made the purchase.
Value delivery involves the customer putting your product to use and the company providing any necessary support and guidance. The smoother and more convenient the process feels the more likely the customer will stay loyal.
Keep in mind that some friction in the beginning is normal. It’s all about how you deal with the onboarding and implementation processes. At this stage, a human touch is essential. Training employees in patience, kindness, enthusiasm and painstaking product knowledge is critical.
Once the delivery phase is complete, customers can clearly see whether your offering has met or exceeded their expectations. If your output delivers on your promise, your customers will recognize this and feel affirmed by their decision to shop with you.
Something that has been historically underlooked and undervalued is the validation a customer receives when your company delivers on its promise. The purchaser chose to buy from you, so having a great experience is as validating for them as it is for your business. In this stage, the customer is more open to add-ons, cross-sells and upsells.
Likewise, when a company doesn’t meet expectations, this can have a personal impact on the customer. It’s not just you that let them down — it’s personally invalidating because they decided to buy from you in the first place. For many customers, this discomfort is enough to make them quickly pivot and find an alternative solution.
Finally, and crucially, you must continue to build on the value you’ve realized for your customer. Nothing lasts forever, and customer expectations and needs are changing faster than ever.
By checking in, asking for feedback and affirming value with customers, you can continually optimize the product to ensure it meets their requirements. Naturally, this approach is one of the best ways to inspire lifelong customer loyalty.
6 Pillars of Reducing Churn and Increasing Customer Loyalty
Customer retention relies on a range of strategies, and each company should approach it differently. However, these six pillars can help any business increase lifetime value and drive realization.
1. Gather Feedback
For the longest time, business leaders have focused on the most tangible and measurable metrics. Worrying about what customers thought and felt seemed beyond the scope of ability. However, in today’s world of social listening and customer experience-driven success, thoughts and feelings are gold dust.
Thankfully, technology — and consumers’ collective desire to share (as evidenced by social media) — make capturing these intangibles possible.
Below are some tried and true ways to gather real-time, actionable feedback from your customer base:
- Use a pop-up to ask why website visitors abandon shopping carts
- Include a post-purchase feedback form — ideally offering a discount for the next purchase in return
- Learn more about customers with live chat or chat box functions
- Create a dedicated email address for feedback — and encourage consumers to let you know about any complaints and grievances, no matter how small
- Follow up on complaints with quick feedback surveys
- Actively monitor social media for any mentions of your brand
- Create online communities — Reddit, Quora and groups on sites such as Facebook or LinkedIn
- Ensure apps have a feedback function built-in
- Offer incentives for feedback — free shipping, discounts, free samples and website shoutouts are effective options
2. Understand What Customers Want
According to research from PwC, customers prioritize convenience, speed, friendliness and consistency. If you can deliver on these areas, you’re more likely to provide an excellent CX.
3. Measure Key Performance Indicators
The metrics you use to measure CX value realization depend on your company, industry and target audience. However, some universal ones to consider include:
- Net dollar retention: Measures how much your recurring revenue has shrunk or grown, factoring in downgrades and negative churn.
- Time to live: The time a customer takes to implement your solution.
- Time to value: The time a customer takes to realize the value of your product or service.
- Return on investment: The amount of value your customer receives from implementing your solution.
4. Incentivize Customers
In the past, offering discounts or rewards was seen as somewhat desperate — but this has changed. One of the most effective ways to impact how customers perceive CX with your brand is to offer incentives.
Giving high-spending customers something for nothing is an excellent way to inspire long-term loyalty and help them realize value.
5. Make Lifetime Value a CX Priority
Customer success efforts often focus on the experience customers have when interacting with your brand, typically with a strong focus on the initial stages of the sales funnel.
It’s crucial for business leaders to prioritize lifetime value as highly as the experience of the buyer journey. This outlook focuses more on at-risk customers, increasing retention and mitigating churn.
6. Employ the Best Customer Success Team
Ongoing value realization ultimately depends on the strength of your customer success team. These advocates should be customer-obsessed, passionate about brand voice and personality and have exceptional product knowledge.
You’ll need a mixture of hard and soft skills to get the most out of this department. For instance, the ability to read data is just as important as people and communication skills.
B2C Value Realization
In 2016, Harvard Business Review worked with Bain & Company to determine 30 elements of value for consumers. These elements are broken down into four categories and organized into a pyramid, similar to Maslow’s Hierarchy of Needs.
- Provides hope
- Affiliation and belonging
- Reduce anxiety
- Rewards the consumer
- Design and aesthetics
- Badge value
- Therapeutic value
- Fun and entertainment
- Provides access
- Saves time
- Makes money
- Reduces risk
- Reduces effort
- Avoids hassle
- Reduces cost
- Sensory appeal
B2B CX Value Realization Framework
Complex emotional reactions are just as important to business customers as to any consumer. In 2018, Harvard Business Review and Bain & Company defined the elements of value for B2B customers.
- Social responsibility
- Network expansion
- Reputational assurance
- Design and aesthetics
- Growth and development
- Reduced anxiety
- Fun and perks
Ease of Doing Business Value
- Time savings
- Reduced effort
- Decreased hassle
- Cultural fit
- Risk reduction
- Component quality
- Improved top line
- Product quality
- Cost reduction
- Meeting specifications
- Acceptable price
- Regulatory compliance
- Ethical standards
CX Value Realization’s Role in Lifetime Loyalty
There’s no magic formula for inspiring lifetime loyalty from your customers. But, understanding and implementing a CX value realization framework is an exceptional strategy for retaining customers.
This article originally appeared in CMSWire.